1 Overview
The contribution of venture capital to society is not only the benefits of venture capital enterprises and venture enterprises themselves, but also a series of promotion and driving effects on the country's innovation ability, competitiveness and national economic development. The purpose and function of venture capital enterprises is not only to buy and sell the equity of venture enterprises to earn capital gains. Securities trading is only the form of venture capital activities, and participating in and cultivating venture enterprises is its purpose and purpose. Only when entrepreneurial enterprises continue to thrive, can the industrial economy, employment market and capital and financial market have a continuous source of development vitality. As the competition between countries has gradually evolved into the competition of comprehensive national strength with high-tech and economic strength as the main standard, the function of venture capital as a catalyst for high-tech industries has also been paid more and more attention, so many countries regard venture capital as an important tool for industrial development (Kortum & Lerner, 2000).
The particularity of venture capital is that it has quite high requirements for the capital, talents, laws and regulations, market mechanism and other environments of the country where it is located, and the government plays an irreplaceable role in meeting these conditions. This is because the government as an economic organization is different from other economic organizations, especially the government has political coercion or market arbitration power that other economic organizations do not have, It can intervene in the market by issuing various supportive policies. Therefore, the research on policy support has very important theoretical and practical significance for the research on the promotion mechanism of the development of venture capital industry.
The objectives and functions of government support are different in different stages, and the support means adopted are also different. Government support can be roughly divided into policy support and institutional supply. The former is mostly direct and temporary non market intervention, while the latter is generally indirect and long-term market-oriented means. Direct support is often seen in the initial stage and rapid development stage of venture capital development. This stage is generally the development of industries led by the government. Various direct policy preferences continue to attract private capital into this field. The role of the government is to promote the formation of venture capital market; Indirect support is generally in the steady development stage, in which private capital is the main force of venture capital, and the legal and regulatory system of venture capital is relatively perfect. The role of the government is to maintain the standardized and orderly development of the venture capital market. The fiscal subsidy studied in this paper belongs to the category of policy support.
Generally speaking, in countries and regions with developed venture capital, theoretical research focuses on indirect support means, such as the introduction and improvement of venture capital laws and regulations, the organizational form of venture capital and the overcoming of the dual principal-agent problem. The research focus of venture capital in less developed countries and regions is on the mechanism and efficiency of direct support means, while China's economy has shown obvious government led characteristics for a long time. Combined with the needs of the development status of venture capital in China, it is very necessary to study the mechanism of indirect government support policies, especially financial subsidies. Unfortunately, there is little research on this in China's academic circles, and the literature mainly focuses on tax policies and other indirect support means. In particular, the analysis of policy support is mostly limited to the situation of complete information. However, under asymmetric information, whether the direct subsidy method adopted by the government is still effective, and what is the mechanism of fiscal subsidy at this time, these issues are still rarely discussed. In view of this, this paper will carry out research on these issues, in order to fill the lack of research in this area, strengthen the understanding of practical policies and improve the positioning accuracy of government support, especially the fiscal subsidy policy.
2 literature review
Foreign scholars' policy support for venture capital mainly includes tax policy, venture capital guidance fund and financial subsidies. On the one hand, the academic discussion on tax policy is relatively early, rich in content, and relatively mature (Abbott & Zuckert, 1941; Poterba, 1989; Cumming, 2005). Most studies show that the impact of tax policy adjustment on venture capital varies with specific taxes. On the other hand, as the theoretical focus of venture capital developed countries and regions shifts to the institutional level, scholars pay less attention to subsidy policies. Keuschnigg & Nielsen (2002) constructs a general equilibrium analysis framework including venture capital agent departments, and studies the role of investment subsidies and output subsidies on venture capital agent departments under this framework, It is found that investment subsidies and output subsidies can stimulate the efforts of entrepreneurial entrepreneurs, which is similar to the previous research conclusions of keuschnigg & Nielsen (2001). Later, keuschnigg & Nielsen (2004) turned to the micro research of venture capital mechanism and constructed a dual moral hazard model. In this model, the efforts of venture capitalists and venture capital agents are unobservable, and at this time, it is impossible to quantify and correct the ineffective allocation of resources by means of financial subsidies.
The development of venture capital in China started relatively late. Although the current theoretical research and practice focus on direct support means, the research on financial subsidies basically stays in the macro analysis, and even is directly included in the general qualitative discussion of policy support (Wang Guanyi, Chen Yu, 2000; Shen Jinsheng, etc., 2001), and there is rarely a separate quantitative analysis. When analyzing the problems of venture capital in China, Wang Yan et al. (2001) pointed out that in addition to expanding the sources of venture capital, cultivating diversified venture capital subjects and improving the exit mechanism, the development of venture capital should also increase government support, provide government subsidies for venture investors and venture enterprises, and establish a government guarantee mechanism. Recently, Li Jidong (2011) pointed out that policy support can not only increase the supply of venture capital, but also improve the efforts of venture capital agents, based on the quantitative research of allocation decision-making model. However, the above analysis is carried out under the condition of complete information, lacking consideration of information asymmetry in reality. In addition, the model directly assumes that policy support will improve the expected rate of return of venture capital projects and reduce the standard deviation of the rate of return, which defaults to the effectiveness of government support and negates the possible problem of "government failure".
Looking at the research literature at home and abroad, it is not difficult to find that the research on the mechanism of financial subsidies on the development of venture capital is relatively lacking, especially in China, there is a basic gap in its quantitative analysis. On the one hand, it may be because its qualitative analysis conclusion is relatively clear and mature, which is difficult to attract scholars' research interest and attention; On the other hand, it may be that the current model quantitative analysis technology of theoretical research in China is not mature enough, and the research in the field of foreign policy support is not sufficient, which makes the development of quantitative analysis limited to a certain extent.
Research on the mechanism of financial subsidies to promote the development of venture capital
3.1 economic analysis: Externalities
Traditional economic theory analysis usually regards the government's participation and support in venture capital as the correction of "market failure" (Joseph E. Stiglitz, 1998; Dai Zhimin, 2002; Li Wanshou, 2006; Rin et al., 2006). "Market failure" refers to the defects or ills spontaneously produced by the market economy in its own operation on the basis of laissez faire. "Market failure" is a problem gradually exposed in the operation of western free market economy for hundreds of years. Western capitalist economy is a market economy based on personal standard and private economy. This "market" is almost "omnipotent and perfect" in the eyes of classical economists. It has a strong ability of self-regulation and automatic equilibrium, from Adam? Smith's "invisible hand" theory, say's law of "supply automatically creates demand" and Marshall's "assumption that the market automatically tends to full employment equilibrium" have made western society full of confidence in market efficiency. But this extremely "effective" market has finally lost its "omnipotent aura" in front of the "failures" exposed in the development of the capitalist market economy. The emergence of market failure makes people have a deeper understanding of the market.
The broad sense of "market failure" can be divided into three aspects: first, microeconomic inefficiency, second, macroeconomic instability, and third, unfair income distribution. Among them, the "market failure" of venture capital market can be attributed to the externality under the microeconomic inefficiency. Externality theory is an important field of market failure theory. The methods of correcting externalities it reveals are closely related to the efficiency of resource allocation. Externality, also known as externality, externality, etc., refers to the phenomenon that an economic subject's behavior affects others, but does not bear the due costs or receive the due remuneration. In other words, externality refers to the additional economic transaction costs or benefits that are not reflected by the market transaction price. When market transactions lead to the impact on the third party, and the price mechanism can not provide the correct signal, it will inevitably lead to the inefficiency of resource allocation. Here, the failure of price mechanism leads to the failure of market mechanism.
The price of products or services with positive externalities only reflects their private marginal income, but cannot fully reflect their social marginal income, resulting in insufficient output supply, which brings additional benefit losses to production or consumers. According to the "golden rule" mc=mb=p, the allocation of resources under externalities is also inefficient. From the perspective of the whole society, the production and consumption of products or services with positive external effects will be insufficient. If we improve it and increase its supply, the society will obtain net benefits. The comparison of private standard equilibrium and social standard equilibrium of products or services with positive external effects can be seen in the figure below:
In Figure 1, when the compensation of additional income is not considered, the free competitive market will make the positive externality products allocate resources according to the equilibrium price (P0) and equilibrium output (Q0) determined by the marginal private cost (MPC) and marginal private benefit (MPB). It reflects the optimal resource allocation of private, but deviates from the optimal resource allocation of society. At this time, the output is too small and the price is low.
In Figure 2, when the government compensates for additional benefits, positive externality products will be allocated resources according to the equilibrium price (PS) and equilibrium (QS) output determined by the marginal social benefit (MSB) and marginal social cost (MSc). At this time, the output increases compared with Q0, and the price increases.
Because the government has the coercive force on all members of society, such as the right to tax, the right to prohibit, the right to punish and the advantage of transaction costs, the government has some obvious advantages in correcting "market failure", which is also the theoretical basis for the government to correct the "market failure" of venture capital.
3.2 partial equilibrium model analysis: asymmetric information
However, "market failure" is not a sufficient condition for government intervention. The theoretical premise of government intervention in economy is: first, necessary conditions. There is market failure, and the government is to pursue public interests to make up for market defects. Secondly, sufficient conditions. Government activities are indeed more successful and superior than private activities. That is, after replacing private activities, government economic activities can withstand the test of the market and show higher efficiency. Finally, advantages. The government has political coercion. This makes the government have some obvious advantages in correcting "market failure". Such as the right to tax, the right to prohibit, the right to punish, the right to order, etc. The government usually uses political power to regulate private economic activities, and uses taxes and subsidies to affect the motivation of resource use. For government behavior, "market failure" is a necessary but not sufficient condition, "market failure" itself cannot constitute a reason for government departments to intervene in the venture capital market. Because government intervention itself may also cause distortion and lack of efficiency, that is, government behavior can not improve efficiency or the government redistributes income to those who should not receive such income, resulting in government failure. In fact, government agencies are indeed not perfect, nor can they operate without any friction and cost. Inefficiency, mistakes in decision-making, corruption and so on are all real.
Based on the above theoretical analysis, the view that financial subsidies can promote venture capital cannot only be based on the "market failure" of venture capital itself, but should further analyze whether financial subsidies can really improve the efficiency of economic resource allocation of venture capital activities. Because of this, the following is a mathematical analysis of the micro efficiency of government support based on the partial equilibrium model. In particular, the model demonstrates whether government intervention in the venture capital market can promote the effective allocation of resources in the case of asymmetric information.
3.2.1 model setting
Based on the previous research framework, this paper will build a simplified partial equilibrium model to study the impact mechanism of government equipment investment subsidies and output subsidies on venture capital. Assuming that the total time is 1, the basic working time of entrepreneurial entrepreneurs is 0 ＜ δ＜ 1， δ Is observable, while the rest of the private time 1- δ It cannot be observed by venture capital agents. If the entrepreneur works hard, it means that he will have private time 1- δ Li is also engaged in venture capital work; If the entrepreneur slows down, it means that he will find another private job in his private time. We have known that the efforts of entrepreneurial entrepreneurs play a key role in the success of venture capital. Assuming that the degree of effort paid by entrepreneurial entrepreneurs is e, if entrepreneurial entrepreneurs devote themselves, that is, e=1- δ， Only the work of entrepreneurial enterprises can realize the ultimate success (exit) of venture capital with the probability of P > 0; If the entrepreneurial entrepreneur spends his private time on other part-time jobs, that is, e=0, the probability of success of the entrepreneurial enterprise is p=0. Assuming that venture capital agents can improve the success rate of venture capital by providing internal value-added services a, such as management consulting, industry experience, etc., and some governments will also provide external value-added services g for venture projects free of charge, such as training, information services and administrative deregulation, so as to improve the success rate of venture capital, which is reflected in the functional nature, namely:
p=p(a，g)，■＞0＞■，■＞0，p(0，0)=p0＞0，■p(a，g)＜1
By definition, P ′ ≡, P ″ ≡.
Assumptions: ① when the venture capital agent takes private jobs, that is, e=0, the value-added services provided by the venture capital agent are not conducive to providing the success rate of venture capital, p=0; ② What is the government's output subsidy rate for start-ups? If the subsidy rate of equipment investment is Z, the basic salary of entrepreneurial entrepreneurs is B, the fixed equipment investment at the time of start-up is k, and the market demand price for products is Q, then the total income of entrepreneurial enterprises is (1 +? Z) Q, and the net profit is (1 +? Z) q-b - (1-z) K. But if you fail to start a business, you will lose all your money. Therefore, the expected net profit of the start-up enterprise is: PQ (1+?) q-b- (1-z) K.
Since entrepreneurs only have entrepreneurial projects, venture capital needs to be provided by venture capital agents, and the cost investment injected is i=b+ (1-z) K. As consideration, the fixed proportion of 1-s in the total income (1+) Q of the venture enterprise must be owned by the venture capital agent. Assuming that the venture capital agent needs to spend a labor unit to provide internal value-added services, the opportunity wage cost is aw, so the expected income of the venture capital agent is (1-s) PQ (1+?) -aw-i, that is:
Π = (1-s) PQ (1+) -aw-b- (1-z) K (1)
The expected return of entrepreneurs is:
C=spq (1+?) +b (2)
Substitute the above formula into formula (1), and remember another expression of the expected return of venture capital agents:
Π =pq (1+?) -aw- (1-z) K-C (3)
While the output subsidy, equipment investment subsidy and external value-added service expenditure g provided by the government, the expected expenditure of the government on each venture capital project is:
G≡? Pq+zk+g (4)
To sum up, the net income outflow from a venture capital project is:
∏+c+aw-? Pq-zk-g = pq-k-g (5)
Among them, the expected return C of entrepreneurial entrepreneurs should be opportunity salary plus risk premium compensation.
3.2.2 contract incentives under asymmetric information
It is assumed that venture entrepreneurs are risk averse when facing income risks, and venture capital agents can completely avoid non systematic risks because they have many venture capital projects ① the basic wage plus output commission model can encourage venture entrepreneurs to devote themselves to venture capital work (LV Zhaohui, 2005). Given the ratio of basic wage B to output Commission s and the exogenous government external value-added service expenditure g, entrepreneurial entrepreneurs choose the degree of effort E. The above three factors together determine the probability of entrepreneurial success. Then the optimization problem of venture capital agents is divided into two steps:
In the first step, given the internal value-added service level a and the corresponding venture capital success rate P, determine the proportion s between the basic salary B and the output Commission of the venture entrepreneur, so as to minimize its payment C. From the part of model setting, if the entrepreneurship is successful, the total income of the entrepreneurial entrepreneur is sq (1+?) +b; If the startup fails, the startup salary is only B, but other income may be obtained from private work (1- δ) w. In this case, the total income of entrepreneurial entrepreneurs is b+ (1- δ) w。
Order? This =sq (1+?), the expected income of entrepreneurial entrepreneurs after full investment is c=p? Z +b. In order to simplify the analysis, it is assumed that the relative risk aversion coefficient is 1, that is, the utility function of entrepreneurial entrepreneurs is in logarithmic form:
u(y)=In(y)（6）
Therefore, the optimization problems faced by venture capital agents are:
■c=p θ+ b（7）
s.t.(PC):pIn( θ+ b)+(1-p)In(b)≥In(w)
(IC):pIn( θ+ b)+(1-p)In(b)≥In(b+(1- δ) w)
Among them, the participation constraint (PC) indicates that the expected utility of entrepreneurial entrepreneurs engaged in venture capital work is greater than their opportunity salary, while the incentive constraint (IC) indicates that the expected utility of entrepreneurial entrepreneurs' dedication to venture capital work is greater than that of their private work.
In the case of complete information, the efforts of entrepreneurial entrepreneurs are observable, and incentives and constraints can be eliminated. The solution of cost minimization is: b=w,? Z =0. However, in the case of asymmetric information, participation constraints (PC) and incentive constraints (IC) are tight, so in (b+ (1- δ) w) =in (W), B is obtained= δ w. By substituting the participation constraint (PC):
? Z =b（ δ- 1/p-1)（8）
The second step is to determine how the venture capital success rate P affects the cost of incentive compatible contracts. When entrepreneurship fails, entrepreneurs have a fixed salary B, which does not depend on the success rate of venture capital P, but the increase of P will change the income share of entrepreneurs in the project income:
■=- μ ■＜0，■= μ ■（2+■）＞0 （9）
Among them, elasticity μ=- ■■, meet:
μ= ■In(■)＞1，■=■-■=■(■-1) （10）
Given the proportion of market demand price Q and output subsidy? Formula (8) determines the proportion of the income of entrepreneurs in the project income, S= θ/ [(1+) q]. As can be seen from equation (9),? Zhang? Hereby /? Zhang P < 0, that is, a higher success rate of venture capital will reduce its income share s, because venture capital agents maintain incentive payments through reduction θ unchanged. For entrepreneurial entrepreneurs, increasing the success rate of venture capital P can reduce the income risk, so the decline of S is acceptable. At this time, the incentive contract cost c=p θ+ B the impact of the success rate of venture capital P depends on:
①c′= θ+ p■= θ (1- μ) （11）
②c″=(1- μ) ■-? Z = ■ (12)
From the above formula ① and ②, we can see that P has two opposite effects on C. On the one hand, will higher P raise the corresponding payment cost? Hereby; On the other hand, project risk reduction will enable venture capital agents to ensure participation constraints with a lower risk premium. And when elasticity μ＞ 1, the latter effect is greater than the former effect, so the marginal cost is reduced. In addition, it is worth mentioning that the proportion of the most basic working hours δ The rise of will lead to the reduction of moral hazard space, and the corresponding risk premium payment will also be reduced.
3.2.3 impact of financial subsidies on venture capital
The government subsidizes equipment investment and output through fiscal policy, which reduces the cost of venture capital and promotes the formation of venture capital market and the development of venture enterprises. The mechanism of financial subsidies can be analyzed from the impact on venture capital agents and entrepreneurs.
① The influence of financial subsidies on venture capital agents
It is known from formula (3) that the expected return of venture capital agents is:
Π =pq (1+?) -aw- (1-z) K-C
That is, the advance investment cost C (P) + aw+ (1-z) k of a venture capital agent on a venture capital project with a success probability of P. Assuming that the success rate of each venture capital project is p, in a statistical average sense, the total cost of advance investment that venture capital agents must pay to ensure the success of at least one venture is:
m=■（13）
In this paper, M is referred to as the "cost of entrepreneurial success" in the statistical sense. The following article will discuss that policy support will promote venture capital agents to make venture capital by reducing the "cost of entrepreneurial success", so as to promote the formation of venture capital market.
According to formula (7) and (8), fiscal policy can only improve the expected return of entrepreneurs by affecting the success rate of venture capital, but has no direct impact effect. In the payment minimization problem, we can get from the envelope theorem:
■=-■■＜0，■=-■＜0，■=0（14）
The above formula shows that since the purpose of preferential policies is to support the development of start-ups and improve the success rate of venture capital, government external value-added services and equipment investment subsidies will reduce the "cost of entrepreneurial success", while under market equilibrium (zero profit), output subsidies will not affect the "cost of entrepreneurial success", but only reflected in the demand price Q. Combined with equation (14), the zero profit condition under market equilibrium can be obtained:
dQ=-■■dg-■dz-■d? Zi (15)
After the financial subsidy reduces the "cost of entrepreneurial success", the development of venture capital industry makes the demand price lower until the market profit is zero. Finally, although output subsidies do not affect the "cost of entrepreneurial success", they will increase the income of venture capital agents, thereby encouraging venture capital activities, which is in line with the research conclusion of Sobel (2006).
② The impact of financial subsidies on Entrepreneurs
Assuming that there are e entrepreneurs in the venture capital market, given that the success rate of venture capital is p, the number of successful venture enterprises in the market is PE. When the output of each startup is 1, PE is the total output of the industry.
Given the demand function d (?), When and only when the current formula is established, the market is cleared:
When d (q) =p (a, g) e, D (q) > 0 (16)
Therefore, D (PE) =ddq required by the equilibrium of venture capital market. The elasticity of demand is η ≡ -qd ′ / D, combined with equation (15), the differential of equation (16) is obtained:
■=( η ■-■■)dz+ η ■+( η ■■-■■-■■)dg（17）
It can be seen from the above formula that the equipment investment subsidy promotes the supply of entrepreneurial entrepreneurs through the demand side and the supply side, especially under the influence of market demand, by increasing entrepreneurial entrepreneurs to increase market supply. Due to the reduction of market price, output subsidies only stimulate the supply of entrepreneurial entrepreneurs through the demand side effect.
The purpose of fiscal policy is to reduce the risk of venture capital and encourage the development of start-ups. When the output PE of the venture capital industry is certain, if the success rate of venture capital increases, the number of venture entrepreneurs required decreases. The last item in formula (16) is the indirect supply effect produced by changing the value-added services of venture capital agents. If? Zhang p '/? Zhang g < 0, government support will "squeeze out" internal value-added services and reduce the success rate of venture capital. When the output PE of the venture capital industry remains unchanged, the number of entrepreneurs required increases. Extract the common factor through equation (16)? Zhang p '/? Zhang g ≤ 0 shows that when the demand elasticity is greater than the critical value, that is η ≥ η* ≡ m/ (M-C ′), η*＜ 1. The net effect is positive. If further assumptions? Zhang p '/? Zhang g ≤ 0, then the effect of financial subsidies on internal value-added services is negative. From the above analysis, it is known that financial subsidies will increase the supply of entrepreneurial entrepreneurs, thus reducing the market demand price for entrepreneurial entrepreneurs.
To sum up, after considering the contractual incentives under asymmetric information, this model points out that the fiscal subsidy policy, on the one hand, encourages venture capital activities by reducing the "cost of entrepreneurial success" and increasing the income of venture capital agents; on the other hand, when the output of the venture capital industry remains unchanged, "crowding out" the internal value-added services of venture capital agents, thereby increasing the number of venture entrepreneurs. Under the joint action of the two channels, financial support will promote the development of venture capital activities and even the deepening of venture capital market.
4 overall evaluation
This paper reviews the literature at home and abroad on the impact and mechanism of financial subsidies on venture capital, and finds that most studies remain qualitative, lack quantitative analysis, and are basically limited to the case of complete information. Based on this, this paper first analyzes the necessity of financial subsidies on the externality of venture capital, and then demonstrates the sufficiency and channels of financial subsidies in support based on the partial equilibrium model. This paper believes that equipment subsidies can reduce the "cost of entrepreneurial success", while output subsidies will increase the income of venture capital agents and stimulate the enthusiasm of venture capital. At the same time, equipment investment subsidies promote the supply of venture entrepreneurs through the demand side and supply side.
Based on the research results of this paper, the author believes that China's financial subsidy policy for venture capital can take the following specific measures: ① increase support, and learn from the technology innovation promotion act for small and medium-sized enterprises formulated by the United States in 1982, the government can establish institutions similar to the technology innovation fund, which are specifically responsible for providing various subsidies and development funds to high-tech start-ups at a high proportion, Compensate the possible risk losses of venture capital, so as to attract venture capital into the high-tech field to the greatest extent. In particular, consider establishing a reverse subsidy application and review system. Venture capital enterprises apply for subsidies by themselves according to the actual development needs of enterprises and policies, and then the relevant implementation units invite professionals to evaluate and review; ② Strengthen the publicity of relevant financial subsidy policies, expand the universality of the policies, and take measures to supervise the implementation of China's current preferential policies such as tax reduction, small loans, training subsidies, social security subsidies, post subsidies and capital subsidies, so as to improve the implementation of the policies. In addition, a set of corresponding punishment system must be established to record and punish violations in the process of financial subsidies; ③ Improve the construction of supporting conditions such as relevant laws, regulations and systems of venture capital market as soon as possible. Since venture capital is mainly carried out in the form of equity investment, in order to prevent speculation and fraudulent manipulation in the capital market, the government needs to formulate relevant regulations to regulate market transactions, ensure the interests of investors and maintain market order.
Considering that China is in the early stage of the development of venture capital, financial subsidies are an important means of policy support, this paper believes that in the practical operation of the specific implementation of the financial subsidy policy, we should pay special attention to the following three issues: first, pay attention to the impact of information asymmetry, increase the qualification examination of start-ups, and allocate financial subsidies to start-ups that need funds most and have development potential, In particular, we should avoid some enterprises from pretending to be entrepreneurial enterprises to obtain preferential policies, so as to improve the efficiency of comprehensive resource allocation. Secondly, pay attention to adopting appropriate financial subsidies to encourage start-ups. Compared with quota subsidies, the incentive effect of proportional subsidies linked to market performance indicators such as output may be more obvious, especially the proportion of subsidies is progressive. Finally, it is suggested to conduct regular subsidy effect audit to assess the performance of financial subsidies, and timely withdraw the subsidy funds of non-performing projects and transfer them to other more advantageous investment projects.
In essence, the fiscal subsidy policy is a non market correction means for the insufficient capital supply in the venture capital market. As keuschnigg & Nielsen (2002) pointed out, the moral hazard and agency cost problems in venture capital enterprises are caused by information asymmetry, which means that the government's fiscal policies, including fiscal subsidies and tax policies, cannot promote the effective allocation of venture capital, Because this does not fundamentally solve the problem of information asymmetry. However, financial subsidies are still the best choice in the early stage of venture capital development when the venture capital market system is not perfect, which is conducive to directly promote the formation and development of venture capital market. As the development of venture capital continues to be standardized and mature, policy support such as financial subsidies will gradually fade out, and the direction of further research in the future will also turn to the institutional supply of venture capital.
notes:
① Although it is too harsh to assume complete dispersion under a limited number of venture capital projects, the following conclusions are still robust even if the relaxation is not complete dispersion of unsystematic risks.